The Bhutanese Leading the way.
The Office of the Consumer Protection (now Competition and Consumer Affairs Authority) declared the QNet scheme to be a pyramid scheme and banned it in 26 August 2022 asking everyone to stop promoting the scheme or recruiting downline members.
QNet essentially marketed itself as an online business where fantastic returns can be made but what awaits most is financial ruin while only a few at the top of the pyramid benefit.
The OCP itself was not the first to ban QNet, a Hong Kong based Multi-Level Marketing (MLM) company. It had previously come as GoldQuest with a gold coin scheme that was banned by Royal Monetary Authority (RMA) in 2003 since it was a pyramid scheme.
Paro case
In a sign of the thriving nature of the QNet Pyramid scheme, towards the end of 2023 around 5 Bhutanese filed complaints against 9 other Bhutanese in the Paro Police station alleging they were cheated of a total of Nu 2.140 million in the QNet scheme.
The five said they had been deceived by the 9 through the QNet scheme and lost their money.
Even prior to that in early 2023 a woman in Paro filed a civil case in Paro court against somebody who recruited her in the QNet business and she lost money. The court took out a judgment awarding her money from the recruiter.
As soon as people learnt about the judgment multiple people started approaching the Paro court. The Paro court passed orders to the people to approach the police and file complaints as there is a criminal aspect in their cases.
Then the five above people accordingly approached the police station. The police having never handled a pyramid scheme took advice from the Competition and Consumer Affairs Authority (CCAA) and recently a charge sheet is being filed.
It has been found that even the 9 people who took the money had passed on the money to people above them.
The police will have to investigate and see whom to charge. A likely charge is deceptive practices.
Quite a few of the victims in the Paro case are people who came back from Kuwait.
Email case
Apart from this on 12th April 2024 a victim named Sangay sent out an email to the Prime Minister’s Office, Home Ministry, CCAA and various media houses saying that the victim had lost Nu 614,000 due to the fraudulent activities conducted under the guise of E-commerce by individuals associated with the QNet MLM scheme.
The victim gave a list of 17 individuals with their names and mobile numbers as being responsible for perpetuating the scheme in Bhutan and as being the main recruiters in Bhutan.
The 17 names included 4 Indians with Indian phone numbers, 4 Bhutanese in Australia and 9 Bhutanese in Bhutan with local numbers.
One Indian number is of Nileen Dutta who is listed as the overall incharge of QNet in Bhutan.
This paper called him and while Nileen Dutta said he has brought QNet products, he claimed there is no QNet scheme in Bhutan and he has not recruited anyone in Bhutan.
However, another source who was recruited into QNet and lost around nu 600,000 said that Nileen is very much there in the Bhutan QNet WhatsApp group along with his name and number.
The source said in return for investing Nu 600,000 which is the minimum amount the source got some ‘products’ like some silver jewelry, small piece of glass that needs to be kept in the fridge and claims to keep food fresh, pendant to avoid cancer, creams and discount in QNet linked hotels in case of a foreign tour.
In reality, the products are mostly cheap items and their price is highly inflated by ascribing non-scientific qualities to them like ‘energy’ or other dubious ‘medical benefits’ not very different from the Enagic or Kangen water MLM Pyramid scheme investigated by this paper in early 2021.
The source said in the group they were assured of Nu 60,000 to Nu 70,000 commission for getting any Bhutanese member to join.
The CCAA called the 9 Bhutanese numbers on the list and most of them admitted to being QNet members.
The CCAA had a meeting and discussed whether to forward them to the police for criminal investigation and prosecution or give them a final warning.
The CCAA assuming that they may not have seen the September 2022 notice banning QNet gave a final warning in letter to the 9 recruiters in Bhutan.
Brazen despite warning
One would have assumed that this would have put a stop to them but the source said that most of these people have gone to Malaysia to attend a QNet meeting there since QNet has a major office there.
The Bhutanese, to verify, called the local numbers but they were mostly switched off but their WhatsApp numbers of the same numbers were active which means they did travel abroad.
This raises questions on if the QNet members are taking the CCAA warning seriously and also helps highlight the brazen nature of QNet which relentlessly operates a banned pyramid scheme and also likes to give itself a false air of legitimacy.
This paper first investigated QNet and its penetration into Bhutan in February 2022 showing it to be a product based MLM pyramid scheme where people make money by recruiting more members and how people got cheated in the process.
Following this the then OCP did its own investigation and banned QNet in 26 August 2022.
This paper in November 2022 did another QNet story of more victims who had been cheated by QNet on the basis that it was a business investment but they could not get back the money.
Soon after the story a man and three women who were from QNet Bhutan visited The Bhutanese paper claiming that there was no cheating and that in fact there were in talks with the then Minister of Economic Affairs Lyonpo Loknath Sharma to legalize QNet in Bhutan as a business opportunity and promote Bhutanese products.
However, none of their claims came through and QNet continued to be banned but a lack of adequate monitoring, no crackdown and just the one meeting with the minister ensured that QNet operators in Bhutan could operate illegally and grow with multiple schemes coming to Bhutan.
This reporter talked to Lyonpo at the time but he said he just met them and no assurances were given.
While the QNet Paro case is about the product being online digital classes and smaller entry amounts of Nu 100,000 to nu 150,000 the one in the email complaint is about different QNet ‘products’ mentioned above with a minimal entry being Nu 600,000.
The source said that the QNet in Bhutan operates in WhatsApp groups. The source said that for the higher amount QNet schemes there are a lot of Bhutanese in Australia who also get drawn in.
Controversy everywhere
QNet has its head office in Hong Kong, and is entering in Bhutan via a highly controversial franchise in India Vihaan Direct Selling against whom multiple cases have been filed, and whose promoters have been detained by the police in the past.་
In India, QNet’s local affiliates or ‘independent representatives (IR) and most notably its main franchise Vihaan Direct Selling, are facing multiple cases and investigation in multiple states in India over its business model, and allegations of cheating its members and also money laundering.
In March 2024, the Deccan Chronicle reported that the Financial Frauds Victims Welfare Association from Hyderabad, India urged the Indian government and private agencies to stop the supply chain of QNet as it is a Ponzi scheme and is causing financial ruin and suicides in India.
Another member Anuja Kotecha said “As a front for their illegal businesses, they sell basic glass with a minimal carving on it, by marketing as an ‘energy provider’ and sell a product worth Rs 50 for Rs 35,000.”
In March 2024 Zee News reported that in a significant blow to QNet’s Vihaan Direct Selling (India) Pvt Ltd, major courier service-providers, India Post and Blue Dart, have ceased parcel services following directives from the registrar of companies (RoC). The move comes amidst ongoing legal battles and criminal investigations against Vihaan for alleged fraudulent activities.
Last year, the Directorate of Enforcement (ED) froze 36 bank accounts linked to Vihaan Direct Selling in connection with a money laundering case involving over Rs 900 mn. ED’s scrutiny dates back to 2014, when it initiated a case against QNet Ltd, Vihaan Direct Selling, and key individuals associated with the MLM operator.
In a further blow to Vihaan, India’s Ministry of Corporate Affairs (MCA) and the Department of Consumer affairs initiated a winding-up petition against the company in August 2019, signalling heightened regulatory pressure on QNet’s operations.
In March 2023, the Enforcement Directorate froze Rs 1.37 billion balance of Vihaan and its promoters for money laundering.
The Cyberabad police says the company is involved in many Ponzi schemes and binary schemes which are product based, vacation based and business tactics.
QNet was founded in 1998 in Hong Kong by Malaysian businessmen, Vijay Eswaran and Joseph Bismark.
The parent company avoids legal troubles by establishing local franchises while at the same time allowing it to earn money. Its members are called ‘independent representatives,’ (IR) and earn commissions after recruiting people under them.
